Pune, Jan 6: The Reserve Bank of India (RBI) Governor, Dr Bimal Jalan, ruled out any direct impact on the Indian interest rates as a fallout of the cut in interest rates by the Federal Reserve. Dr Jalan said the domestic interest rate environment was positive, but added: "There is no need to look at RBI for fixing interest rates. We have deregulated interest rates and left the decision on interest rates entirely to the bankers." The RBI Governor was addressing the anniversary function of the National Institute of Bank Management here.Dr Jalan said Indian banks could secure a presence in the international financial market but regretted that even today "it takes 40 minutes to encash a dollar traveller cheque in Mumbai and 15 days for inter-state cheque clearance". On a scale of one to 10, he said, the Indian banking system barely made it half way in technology-adoption, even though India is a frontrunner in software development.
Dr Jalan said to achieve global competitiveness, Indian banks would have to change drastically. He set no time-frame but stressed the need for for a quick start. Banks would also have to take cognizance of the fact that their dominance in India will be challenged by other financial intermediaries.
The banking system will have to conform to international standards and this was no longer a matter of choice. Tougher norms, more transparency and better disclosure systems will have far-reaching implications for the Indian banking system. ``The NPAs are an Albatross around the neck of all banks and a clean-up job has to be done,'' the Governor said. Dr Jalan said the public sector character of the banking system need not be a constraint on growth and modernisation. He said there were pros and cons, but it was up to the Indian banks to eliminate the disadvantages and maximise the advantages.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
